Question

1. Intuitively, do you agree with the idea that technological change and institutions improve the productivity of capital, consquently improving output per worker? Give economic logic (if possible with real life example) behind your agreement or disagreement.
2. How do policies aimed to counteract business cycle movements interact with movements in job flows, labor market matching process, and worker flows?
3. How might different institutions and policies affect employment in a labor market through varying levels of workers’ bargaining power?

Answer 1

1. Intuitively, do you agree with the idea that technological change and institutions improve the productivity of capital, consquently improving output per worker? Give economic logic (if possible with real life example) behind your agreement or disagreement.
2. How do policies aimed to counteract business cycle movements interact with movements in job flows, labor market matching process, and worker flows?
3. How might different institutions and policies affect employment in a labor market through varying levels of workers’ bargaining power?

Question 1

Answer: technological change is very essential for economic growth, change in technology leads to increase output, increase income generate investment and also capital. Technology improvement is ver essential for change is production process. Technological progress is take place through innovation, invention. Improvement in technology increase output per head .

Due to technological improvement organ transplant is very much possible now a day. If we compare it to in past time where individual is not technologically advance than they have not that kind of facility to rescue a individual life but now it is possible. This is possible just because of innovation, improvement and change in technology. Another example is computer which we use now a day. First computer was very big and not easy to handle but now we can use Minicomputer which will be fix very comfortably in our Palm. This is because improvement in technology.

Question:2

Business cycle means regular ups and downs in economic activities. Government and fed take fiscal and monetary policy to stabilize fluctuations in business cycle. Government can spend more to increase purchasing power. Investment is very important tools of business cycle. If investment increase than demand increase, purchasing power of the individual increase and income also increase. Fed can reduce and increase the money supply to control inflation, deflation and recession in economy. During great depression as there was inflation and unemployment that stagflation was there , fed depreciate the money so that economy will stabilize. On the other hand fiscal policy like government expenditure after war that is world War 11 increase economic expansion.

Question:3

Answer: investment in human and physical capital , Machinaries , technology , education increase productivity and skill and also improve job opportunity. Inflation is the result of increase in unemployment because during inflation purchasing power of individual decrease, demand decrease, income decrease and demand for labor Also decreases. Fed can red inflation by taking appropriate policy. Wage can fluctuate if there are union, union have bargaining capacity to increase wage . However wage of labor will fluctuate according to their productivity. If labor are. More productive then their wage are more and vice versa

Hope answered your questions thank you